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IHT - gifts from income

including wills and probate
meldrewreborn
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Re: IHT - gifts from income

#20710

Postby meldrewreborn » January 6th, 2017, 2:44 pm

I don't think anyone has mention a will variation. The inheritance from her dead husband could be passed direct to others without it being considered the wife's at all. If she already has substantial assets and doesn't need the income (I don't know the facts but if....) the will variation might be a good option.

PinkDalek
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Re: IHT - gifts from income

#20720

Postby PinkDalek » January 6th, 2017, 3:01 pm

meldrewreborn wrote:I don't think anyone has mention a will variation. The inheritance from her dead husband could be passed direct to others without it being considered the wife's at all. If she already has substantial assets and doesn't need the income (I don't know the facts but if....) the will variation might be a good option.


I did consider mentioning that but the OP indicated the inheritance had already been received. Additionally, presumably there was no IHT involved on the grandfather's death due to the inter spouse inheritance.

Plus, the potential beneficiaries involve 7 grandchildren (minors or not?) and it might be the grandmother doesn't wish some or all of them to be entitled to the full capital but merely the income therefrom.

As you suggest, we don't know enough of the facts.

Gengulphus
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Re: IHT - gifts from income

#20728

Postby Gengulphus » January 6th, 2017, 3:23 pm

meldrewreborn wrote:I don't think anyone has mention a will variation. The inheritance from her dead husband could be passed direct to others without it being considered the wife's at all. If she already has substantial assets and doesn't need the income (I don't know the facts but if....) the will variation might be a good option.

But it's unlikely to save significant IHT. Anything passed from the dead husband to his wife is exempt from IHT; anything redirected with a Deed of Variation either becomes subject to IHT on his death, if his estate has already fully used his IHT allowance, or decreases the amount of his IHT allowance that is transferrable to her estate on her death and so increases the amount subject to IHT on her death, or a combination.

There are some timing differences that are only likely to make minor differences to the IHT payable, and there are some possible special circumstances involving having been widowed more than one time that would change the above logic - which is why I say "unlikely to save significant IHT" rather than something more definitive.

Gengulphus

k333
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Re: IHT - gifts from income

#25718

Postby k333 » January 24th, 2017, 3:09 pm

Going back to the original idea, I suggest you print out page 6 of IHT403 so she can see all the record keeping she will have to do to get this tax relief. Comprehensive details of all income and expenditure. Ouch!

- K

Bouleversee
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Re: IHT - gifts from income

#179845

Postby Bouleversee » November 12th, 2018, 9:31 pm

By the time I had got to the end of this thread, I had forgotten much of it. I should be grateful if you experts could confirm that I have understood this correctly and what I have in mind makes sense.

I have held shares in Victoria (VCP) for very many years and they were in an ISA originally. When Wilding took over and the company was transferred to AIM, they had to be taken out of the ISA and when AIM shares were subsequently permitted in ISAs, they had already risen a lot and I had no ISA capacity so I still hold in certificated form.

I had intended to hold till my demise whereupon they could have passed to my heirs without IHT being payable. However, as it now seems likely that they will be taken over at some point and I am unlikely ever to need the value myself, I thought that the recent drop in share price might be a good opportunity to offload some of them by gifting to my 4 grandchildren in bare trusts, with a view to their possibly being transferred into Junior ISAs which I am advising their parents to open, and kept (assuming they don't get taken over in the meantime) till they need the money for university fees or house purchase or other sensible reason. (I know they will be legally entitled at 18 but don't anticipate that will create any problems.)

Questions:

Am I correct in thinking that :

1. so long as I don't die sooner than 2 years after the gift, there will be no IHT payable?

2. If they get taken over either for cash or by a non-AIM company before 2 years, another AIM share can be substituted without restarting the clock?

3. My profit up to the date of transfer will be subject to IHT?

4. When they sell or if a takeover occurs before they do so, any gain between value at date of gift and either transferring into a JISA or the date of the takeover/disposal will be liable to cgt subject to the annual allowance?

I hadn't realised that AIM shares counted as unquoted; I thought that was only private companies.

I have already bought some more VCP shares for myself in my ISA near the low point but will be ununable to sell any remaining certificated shares till I get a balance certificate back from the registrars after the gift transfer. At that point the gain on the sold shares will presumably be liable to cgt, subject to my annual allowance which is rather annoying when they were in my ISA originally but that's life. Will the IHT exemption continue in these circumstances or must I have sold the shares before buying in the ISA? I suppose I could always sell and buy more if necessary.

I will read through the thread again tomorrow and see if I have left anything out.

yorkshirelad1
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Re: IHT - gifts from income

#179948

Postby yorkshirelad1 » November 13th, 2018, 11:33 am

funduffer wrote:My Mum is 88 and has recently inherited a 6 figure sum from my Dad, who died earlier this year.

She wants to give money to her 7 grandchildren, wIthout incurring a large IHT bill after death.

[snip]

FD


I'd like to add some thoughts on tax relief on AIM shares (using BPR) that others have mentioned and I have thought of.
NB: IANAL
Using AIM shares for IHT relief can be tricky as no AIM company will guarantee their status for IHT relief. There is no HMRC list of AIM companies that qualify either. No one has a crystal ball and can tell what the situation will be in n years when the time comes to claim the relief. There are rumours that IHT relief on AIM shares may have a limited lifespan as the IHT relief is being used for something that it was not intended for. There are managed AIM funds around that do the footwork for you (at a price). As long as you're aware of that before you enter into it.......

Bouleversee
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Re: IHT - gifts from income

#179957

Postby Bouleversee » November 13th, 2018, 12:04 pm

Quite right, Yorkshirelad, which is why I don't see any point in hanging on to my profitable AIM shares just for IHT reasons and I think it makes sense to get them out of my estate now when opportunities present themselves, bearing in mind cgt implications. I should have included a reference to delisting in my previous post and I see I put IHT instead of cgt. in Question 3. (I shouldn't try to deal with such complex things in late evening now that I wake so early.)


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